Like the product itself, the world of oil is a murky one. From the infamous Seven Sisters to conspiracies about the war in Iraq, oil is big business – and one that everyone from corporations to entire nations are willing to fight for.
For the average motorist however, oil is simply an essential resource we’re 99% sure we’re being overcharged for – both at the pumps and in our homes. But the question is, what lurks beneath the surface of the oil industry, and how far are the big companies willing to go to fleece consumers?
We’re here to find out, with 3 petrol price secrets oil companies don’t want you to know.
- Zone Pricing: What Is It and How Does It Affect Me?
Using a number of different factors and indicators – including traffic volume, onsite amenities and average income of surrounding households – oil companies charge more or less for fuel in some areas than others.
This is particularly evident in large cities like Manchester, where fuel prices vary hugely from garage to garage. In a less-wealthy district, petrol prices are likely to be cheaper, whilst in an affluent borough they’re often a few pence higher.
Oil companies will also charge more at the pumps if a station has specialist amenities and facilities, such as a toilet, carwash or café. So, if you’re looking to save on fuel, find the most basic service station in your area.
Whilst some would label zone pricing as simple supply and demand, others would argue it’s a pervasive form of profiteering.
- Production Cost VS. RRP – Just How Big is the Gap?
In Britain, Europe and other developed countries, the demand for oil has never been higher – with more cars on the road and more houses in need of power. It’s this demand however, that’s causing oil prices to skyrocket – or so we’re lead to believe.
The truth is, a barrel of oil costs just $2 to produce, which isn’t much, given the intensity of the extraction process. Nor is it much when compared to how much each barrel sells for – an eye-watering $130 per unit. And who’s left to foot bill? The consumer, of course.
Whilst we’re constantly reminded the demand for oil is the root cause of high prices, we can’t help wonder where the multi-millionaire oligarchs acquire their riches.
- Price Manipulation – How It Affects the Price You Pay
As the world’s most expensive resource, oil means mega bucks for those involved in selling it, buying it and dealing in it. But what about the rest of us? Surely we can share in the limitless wealth of oil too?
The short answer: no, we can’t. Whilst you’d expect the profit margins of the planet’s oil firms to be fairly sizeable as is, they’re more than happy to manipulate oil prices to squeeze every last cent out of an unsuspecting public.
From the oil giants themselves to the city traders involved in distributing it, most parties involved in the buying and selling of oil are out for a slice of profit pie – at the expense of the consumer.
In order to inflate their profit margins, oil speculators use various tactics to manipulate the per barrel cost – thus driving up the price we pay at the pumps. One of the simplest methods of doing so is to mislead buyers over the production cost; a tactic companies often use on a long-term basis to increase profit for a set period.
City traders on the other hand, buy up vast quantities of oil before sitting on it for an elected period of time. This approach causes a squeeze in supply and pushes up the per barrel price – allowing them to make a greater profit when they eventually sell.
Although you might not notice the affects of price manipulation, it’s estimated the practice costs the British public an estimated £5.5 billion a decade in excess – and wholly avoidable – energy fees.
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